It's easy at times to let a theoretical principle interfere with speedy collections. It shouldn't have been necessary, for example, for me to shepherd paperwork through the department store's maze, or to track down lost shipments in my customer's warehouse. Maybe it shouldn't have been necessary, but it was if I expected to be paid sooner rather than later.
"You didn't send enough copies of the invoice." Some people make this excuse sound like an accusation. They have better things to do, they say, than to stand at the copy machine all day, making copies of your invoices. Even so, I've often been told that is just what the clerk was intending to do when I called. Sure he was.
Whenever I run into this problem with a new customer, I make a note of the exact quantity of invoices they need. In order to get paid on time, I'd be happy to send my customer a dozen copies of an invoice.
"You just missed our last computer run; we'll pay again in two weeks." Few companies whether large or small, pay their vendors daily. Most write checks either weekly or every other week, and it's nearly impossible to get paid at any other time. But once you know each customer's payment schedule, you can speed collections by working within their system. When a large payment is due, I often call customers several days before the deadline for a scheduled computer run to make sure that all the paperwork is in place. If there's a problem, I have a good chance of fixing it in time to get paid on time.
Occasionally, in fact, it will pay to send invoices by an overnight delivery service. For example, suppose you will be paid two weeks sooner if your customer receives your $5,000 invoice the next day. If your bank charges you 12% interest, that half-month delay will cost you about $25, while most overnight delivery services will run you less than $15.
"We lost your invoice." Along with "I'm from the government; I'm here to help you," this is one of the great lies of all time. I maintain binders containing forms on which I record all collection calls. If a customer claims to have lost my invoice, I quickly review my notes of past conversations with him. If I see that he regularly loses invoices, I'll explain why his excuses have begun to strain my credulity.
"Our computer's down." This is another great lie. Unfortunately, it is true so often that you seldom can attack it head on. But keep in mind that every company, whatever its size, has the ability to issue handwritten checks. The accounts payable clerk who offers this excuse may not have the authority to write a check, but someone higher up certainly does.
One friend of mine, a former Marine, climbed this chain of command until the excuse became an obvious lie. He then called the company's president, beginning the conversation with, "You've got a bunch of g__ d_____ liars working for you!" He got his money.
"Cash is tight this time of the year." One way to respond to this problem is to ask your customer for details. You may learn of problems that will affect other companies as well. Also examine your customer's payment history on previous anniversaries of the current date. If collections were slow but acceptable then, they'll probably be slow but acceptable now--provided the company's finances are basically sound. Under such circumstances, I try to get the company to pay me a partial amount, then commit to a payment date I can live with. But if the problem appears to reflect a downward trend instead of a seasonal one, it's time to make more serious collection efforts.
If I'm not mistaken, you're going to hear more and more excuses over the next several months. This is probably a good time to start making a list of the ones you hear most often so you, too, can plan what actions you should take to overcome them and thus speed up your collections.
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This resource is (c) 1996 by Charley Kyd, president of The Kyd Group, which specializes in turning business data into management insight. Contact Charley Kyd at IncSight Corp., Fax: 425-742-2897, or e-mail
kyd@incsight.com. Visit his Web site at
www.IncSight.com.
